London has recorded the strongest growth in business activity among the 12 UK regions and nations for the eighth successive month.
The headline NatWest London PMI® Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – posted 57.4 in April, up from 57.1 in March.
A sharp rise in inflows of new work was recorded across the capital in April, with increased client activity said to have supported the latest uptick in sales. The rate of growth quickened to a three-month high and was rapid overall.
April data also indicated confidence regarding the 12-month outlook for activity across London. Sentiment remained historically strong, despite slipping slightly to a five-month low. Firms were hopeful that new and improved product launches and increased investment would support activity in upcoming months.
April data signalled a renewed expansion in workforce numbers across London, with growth now noted in five of the last six survey periods. According to anecdotal evidence, growth in sales encouraged private sector companies to raise their staffing levels.
Catherine van Weenen, Territory Head of Commercial Mid Market at NatWest, said, “London remained the strongest performing region of the 12 tracked regions and nations at the start of the second quarter.
The sharp and quicker expansion in the capital also supported growth in activity across the UK as a whole. Moreover, the employment picture recovered, after faltering slightly in the previous survey period. A sustained rise in business requirements encouraged firms to take on staff. Additionally, backlogs across the capital continued to rise, suggesting there is scope for companies to step up their hiring activity in the coming months.
“In terms of prices, the rate of input price inflation intensified, with cost burdens rising markedly in April. Though sharp, the upturn in charges was weaker in comparison, indicating that companies were in part absorbing some of the heightened cost pressures.”
Performance in relation to UK
While the upturn in employment across London was marginal overall, it surpassed the UK-wide average, where jobs growth broadly stalled. A quicker rate of backlog accumulation was recorded across London in April, with work-in-hand rising for the fifth straight month. Firms noted that increased business requirements and weak hiring activity underpinned the latest expansion in backlogs.
The upturn in backlogs across the capital went against the national trend, where outstanding business was depleted for a twelfth successive month.
Cost pressures across the capital were marked in April, as the rate of input price inflation ticked up to an eight-month high. Panellists commonly associated rising costs with higher wages and increased import prices.
Of the 12 monitored UK regions and nations, London recorded the second-strongest uptick in input costs, with only the South West registering a stronger rate of inflation.
Despite the notable increase in cost burdens, private sector companies across London raised their charges at a slightly weaker rate in April.
The rate of output price inflation nevertheless remained sharp, amid reports of growing cost burdens. Moreover, the increase in London continued to outpace the UK-wide average.
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